On March 30, Beijing Compass Technology Development Co.Ltd(300803) ( Beijing Compass Technology Development Co.Ltd(300803) . SZ) replied to the inquiry of Shenzhen Stock Exchange on the company’s restructuring of wechat securities.
Previously, Beijing Compass Technology Development Co.Ltd(300803) announced the reorganization, and planned to pay 1.5 billion yuan to the creditors of Wangxin securities and obtain 100% shares of Wangxin securities after bankruptcy and reorganization. However, according to the latest disclosed annual report, Beijing Compass Technology Development Co.Ltd(300803) Book monetary capital is 1.607 billion yuan, of which non loan self owned capital is 1.532 billion yuan.
In the inquiry reply, Beijing Compass Technology Development Co.Ltd(300803) made it clear that the transaction funds are all self owned funds. Due to the non introduction of external investors, the restructuring will not only almost empty Beijing Compass Technology Development Co.Ltd(300803) cash reserves, but also cause huge goodwill.
Beijing Compass Technology Development Co.Ltd(300803) further disclosed that the company plans to increase the capital of Wangxin securities by no less than RMB 2 billion within one year after the completion of the reorganization. The capital source is the operating profits of listed companies, and non-public issuance of shares, allotment of shares or issuance of convertible bonds.
goodwill impairment risk still has huge exposure
Since it was announced and confirmed as the recombiner of wechat securities in February and October, Beijing Compass Technology Development Co.Ltd(300803) share price has shown a wave of high opening and low going trend, with a maximum of 50.46 yuan and a minimum of 36.62 yuan, closing at 40.70 yuan as of March 31.
According to the revised reorganization draft, Beijing Compass Technology Development Co.Ltd(300803) currently has a monetary capital of 1.607 billion, of which 74.73 million is bank loans and its own capital is 1.532 billion.
After the completion of the 1.5 billion transaction, not only did the company’s own funds shrink significantly, but due to the low level of net assets of Wangxin securities, Beijing Compass Technology Development Co.Ltd(300803) goodwill assets will increase by 1.239 billion, and the proportion of goodwill in net assets will reach an alarming 96%.
Therefore, the Shenzhen stock exchange requires the company to explain what measures the company will take to protect the interests of small and medium-sized investors in case of goodwill impairment caused by poor performance of wechat securities Beijing Compass Technology Development Co.Ltd(300803) once there is no performance commitment in the restructuring.
Beijing Compass Technology Development Co.Ltd(300803) responded to the above questions by focusing on measures such as corporate governance, internal control, group resource integration and future dividends of Wangxin securities. As for the supplementary performance commitment or other quantifiable specific measures, the company has not been listed below for a long time.
According to the calculation of the pro forma statements before and after the reorganization of listed companies, the operating income of Wangxin securities in 2021 was 41.3 million yuan and the net profit was 54.33 million yuan.
In the statement of various businesses in the reply letter, the self operated business of Wangxin securities has not been started yet, the serious loss of investment bank and asset management business personnel, backward system construction and other problems need to be solved step by step after the reorganization is completed.
Investors have to pay attention to the operating risks of the restructured company, whether from the perspective of development potential or the possible impairment of goodwill in the future.
solving the pressure of funds is imminent
Compared with the reorganization of non-financial enterprises, the Beijing Compass Technology Development Co.Ltd(300803) reorganization of wechat securities still needs to pass the examination and approval of shareholders’ qualification by regulators.
According to the risk disclosure link of the amendment, Beijing Compass Technology Development Co.Ltd(300803) as the controlling shareholder of wechat securities, Beijing Compass Technology Development Co.Ltd(300803) actual controllers Huang Shaoxiong and Xu Bing’s qualifications as actual controllers of securities companies need to be approved by the CSRC. If the approval is not passed, the reorganization will be automatically terminated.
According to relevant regulations, if the business of a securities company has significant leverage (such as margin trading, equity pledge, derivatives trading, etc.) and there are cross risks between multiple businesses, the total assets of its controlling shareholders shall not be less than 50 billion yuan and the net assets shall not be less than 20 billion yuan.
While Beijing Compass Technology Development Co.Ltd(300803) by the end of 2021, the total assets of Beijing Compass Technology Development Co.Ltd(300803) are 2.046 billion yuan and the total equity attributable to shareholders is 1.282 billion yuan, which is far from the requirements of the above provisions.
In response, Beijing Compass Technology Development Co.Ltd(300803) replied that at present, there is no stock business in the equity pledge business of Wangxin securities, the margin trading business is stopped because the securities company has exposed significant risks, and the option market making and OTC derivatives business have never been qualified, so there is no leveraged business.
In addition, Beijing Compass Technology Development Co.Ltd(300803) cited the provision that the reorganization involves “special circumstances such as merger of securities companies or takeover and custody due to major risks”, and considered that listed companies can exempt from the above provisions.
No matter whether the qualification review of shareholders can pass the customs or not, capital constraints are the threshold that securities companies have to cross on the development path.
To this end, Beijing Compass Technology Development Co.Ltd(300803) said that the company would increase the capital of Wangxin securities by no less than 2 billion yuan within one year after the completion of the restructuring. The source of funds could be the operating profits of listed companies, non-public issuance of shares, allotment of shares or issuance of convertible bonds.
An investment banker told reporters that the qualification requirements for convertible bond issuance are high and the review is stable. However, due to the large capital constraints on the issuance scale of convertible bonds (the bond scale must be lower than 40% of net assets after issuance), if enterprises need large-scale financing, they must use other forms of portfolio financing, and such a time cycle will be very long.
